Project Description

CHAPTER ONE

Introduction

Although informal relations between Nigeria and China started before independence, Nigeria’s official contact with the People’s Republic of China (PRC) was in 1960 when China was invited to Nigeria’s independence celebrations. China opened its embassy in Lagos on 6^th April, 1971, while Nigeria reciprocated in October of that year. Perhaps, there are some characteristics that are common to Nigeria and China. The People’s Republic of China was founded and proclaimed on the 1^st day of October, 1949 and the Federal Republic of Nigeria emerged as an independent entity from British colonial rule on the 1^st day of October, 1960. Therefore, Nigeria and China share symbolic day and month of political independence. Beyond this, China is the most populous country in the world (with estimated population of 1.5 billion), while Nigeria is a country with the largest concentration of blacks in Africa (with an estimated population of 150 million), (Oluwole, 2002).

In 1962, a communiqué of talks between Nigeria and the economic delegations in Beijing with the presence of Mr. Zhou Enlai, the then premier of the state council of China was signed. Chairman Mao Zedong granted an audience with all the scientists attending the Beijing scientific seminar and met with Mr. Chike Obi, head of Nigerian delegation in 1964.  In 1972, a Chinese economic and trade exhibition, the first Chinese exhibition was held in the Nigerian capital Lagos after the set of diplomatic ties between Nigeria and China in 1971. Premier Zhou Enlai and the then foreign Minister of China, Mr. J.I, Pengfei, met with Mr. Okoi Arikpo, the then Nigeria foreign minister in 1973. In September 1974, Chairman Mao Zedong met with the then head of state of the military government of Nigeria and Commander in Chief of the armed forces, Gen. Yakubu Gowon in Beijing. Also in the year 1981, Vice Premier Huang Hua visited Nigeria for business talk. Major General Babangida, the then Army Chief of Staff, attended the 35^th anniversary of the founding of the peoples’ Republic of China at Tian Ammen square in Beijing in 1984.  1985 to 1986 marked the signing of implementation of programme on the cultural cooperation agreement between the government of China and Nigeria in Beijing. In the year 1989, Chief of Army Staff, Gen Sani Abacha made official visit to China to consolidate the relationship between the two countries.

Gen. Sani Abacha (in power from 1993 to 1998) initiated contact with the Chinese government early in his rule. The Nigerian-Chinese Chamber of Commerce was founded in 1994 (Egbula and Quizheng, 2011). The 30 years that followed diplomatic relation between the demographic giants of Asia and Africa produced little economic consequence. While China was transforming into an economic power, for Nigeria the 1980s and 1990s were marked by a series of military coups. It was not until the return to democratic rule in Nigeria in 1999 that economic relations between Nigeria and China began to develop in earnest. Olusegun Obasanjo’s election in 1999 coincided with the start of a view Chinese orientation towards Africa in 2000.during Obasanjo’s second term (2003 – 2007), both China’s president Hu Jintao and Prime Minister When Jiabao visited Nigeria, and Obasanjo made two official visits to Beinjing. Various other ministerial level visits conducted during this time allowed the two countries to develop and intensify mutual friendship and familiarity (Mofom, 2004). In 2001, the two countries signed agreements on the establishment of a Nigerian trade office in China and a china investment development and trade promotion centre in Nigeria. The inter-governmental Nigeria-China investment forum was then founded in 2006.

During the Chinese foreign minister’s visit, a memorandum of understanding   (MOU) on the establishment of a strategic partnership was signed. Nigeria Officials specified that petroleum, power, telecommunications and manufacturing sectors would be the main targets for investment. Given China’s keen Interest in securing a steady supply of fuel for its rapidly expanding economy, the petrol sector was at the centre of its investment strategy. The Nigerian agency responsible for the privatization of state-owned enterprises also appealed for Chinese investment in its privatization programme (China daily 2006). Beijing laid out a clear strategy based firmly on its economic interests. The ministry of commerce identified this interest towards Nigeria as:

• To increase Chinese multinational companies, in the Nigerian market share
• To expand the Nigerian market for Chinese manufactured goods
• To increase China’s presence in Nigeria’s oil and gas sector. And
• To leverage its investment in Nigeria as a gateway for entering ECOWAS market.

Obasanjo’s approach to China in terms of foreign direct investment and trade, branded “oil for infrastructure”, which consisted awarding oil contracts on favourable terms in exchange for China’s commitment to deliver key infrastructure improvement products. According to Salter (2009), Obasonjo’s decision reflected Nigeria’s dire need for improved infrastructure and a growing frustration with the conditionalities associated with western aid. Obasanjo was also certainly impressed by the infrastructure he saw during his visit to China.

However, President Umaru Musa Yar’adua came to power following elections held in April 2007.  Citing concerns about a lack of transparency, the new administration cancelled or suspended most of the oil for-infrastructure contracts signed during the Obasanjo regime. He discontinued the continuity by embarking on a re-allocation policy through the many reversals of private public enterprises that were concluded by the previous administration (Onuoha, 2008). Little progress was achieved as it concerned Nigeria-China relations within his three years of leadership.

Moreover, after Yar’Adua’s death in May 2010, Vice President Goodluck Jonathan assumed Presidency and the relationship began to rebound. At the end of 2010, China declared its new plan for a strategic partnership with Nigeria, featuring political equality, mutual trust, economic win-win cooperation and cultural exchange. When Jonathan stood for election in April 2011, the Lagos news paper the Punch reported that 119 tons of electoral materials, including ballot papers, were made in China. The Chinese President sent special envoy and minister of railways Shang Avan zu to attend Jonathan’s inauguration in May, 2011, during which they re-affirmed the friendship between the two countries and vowed to increases the involvement of Chinese enterprises in rail way and other  infrastructural improvement as well as in Nigeria’s overall economic development (Salter,2009). The bilateral economic relations continues to increase, that even recently Jonathan and some senior cabinet members made a four-day trip to China which started on 19^th July nations news paper, June 18 2013 p18). The rationale behind the trip is to make China to see Nigeria as an appealing ground for investment and trade, so that they can increase the rate of their trade and investment in the country.

This study is designed to explore the political economy of Nigeria-China economic relations ’’ between’’ 1999 to 2013. With the aims of ascertaining how trade and investment fared between these two countries within the period of study.

 

 

1.2       STATEMENT OF THE PROBLEM

Chinese economic and political activity in Nigeria and in sub-Saharan African in general is increasing at an exponential rate. For instance, (Gud Kun 2010) opined that china has invested over 7.24 billion dollars (N108 trillion) in Nigeria’s economy so far, especially in strategic areas like energy, agriculture and telecommunications. Also Ogunsawo, (2007) maintains that Nigerian has remained a good market for Chinese goods and investment. The author avers that it is a general belief that the increasing Chinese investments of capital and technology in Africa will reasonably help to unlock the African continents vast resources and potentials. Moreover, in his own report, (Onuoha 2008) noted that China has made a series of major moves to promote trade and economic changes between China and Africa in the 21^st century.  According to Kwanashie (2007), China has been a source of cheaper consumer goods attracting an increase flow of Nigeria merchants seeking cheap sources for imports. (Omoh, 2013), opined that the Chinese Invasion of African countries, Nigeria, Zambia, Gabon, South-African, Cameroun, Democratic Republic of Congo etc. in search of energy is reminiscent of the political scramble for  Africa. (Alden 2005) reviews the evolution of Sino-African economic relations since the 1970s; Edwards and Jenkins (2005) study trade-poverty links; Kennan and Stevens (2005) attempt to identify possible winners and losers among African countries as China becomes more prominent in world trade; Jenkins and Edwards (2006) examine the direct and indirect trade impact of China and India on sub-Saharan Africa. A recent study by an OECD staff team emphasizes trade and foreign direct investment (FDI), focusing on China’s and India’s role in specific commodity and energy markets Goldstein et al., (2006). A World Bank study investigates constraints or policy challenges “at the border, behind the border, and between the borders for increasing Africa-Asia trade and investment (Broadman, 2007).

According to Taylor (2006) Chinese trade and investment growth is propelled in a part, by a motive to procure cheap sources of raw materials and energy from the continent (Africa) to fuel its expanding economy, as well as necessity for export market abroad. In his own contribution, Ezirim (2007), argued that china’s great in road into Africa has been largely successful and meant to give her leverage in the never-ending rivalry between her and the West.  According to the author, in the bid to accept her good fortunes, African states have walked straight and blindly into the yawning Chasm deliberately created by the Chinese to make Africa totally dependent on her  in order, not just to spite the West, but also, to exploit the abundant resources that are in Africa. However it is noticeable that most authors who have contributed in this topic were mostly concerned with China-Africa relations and the rate of increase in this relations without much emphasis on the Nigerian-china economic relations. Also none of the literature has satisfactorily examined the impact of the growing Nigeria-China relations on trade investment in Nigeria and the implication of the growing china’s economic demand in the level of Chinese Foreign Direct investment in Nigeria sector in Nigeria. It is against this background, that we raise the following research questions;

• Did the growing Nigeria-China economic relations implicated in the increase in China’s trade investment in Nigeria?
• Does China’s increasing economic demand implicated in the volume of Chinese Foreign Direct Investment in Nigeria?

1.3   OBJECTIVE OF THE STUDY

The broad objective of this study is to ascertain the Political Economy of Nigeria-China Economic Relations 1999-2013 especially as it pertains to trade and Foreign Direct Investment. Many scholars have contributed a lot with the aims of ascertaining how trade and investment fared between these two countries within the period of study

Specifically, the study aimed at ascertaining

• Whether the growing Nigeria-China economic relation implicated in the increase in China’s trade investment in Nigeria.
• Whether China’s increasing economic demand implicated in the volume of Chinese Foreign Direct Investment in Nigeria.

1.4     SIGNIFICANCE OF THE STUDY

The significance of this study is of two folds; theoretical and practical significance. Theoretically, the study shall advance the frontiers of knowledge, as well as join the on-going intellectual debate on the dynamics of Nigeria-China economic relations. Practically, the study will go a long way in serving as a useful tool for policy makers and government agencies for the following reasons;

• The study will enable Nigeria and other African states in general to ascertain the practice (s) which China adopted to become the economic surprise of the 21st century and adopt same if possible.

As a result of this study, it is expected that the national government especially in Nigeria will be mobilized to re-examine the existing theoretical elaboration on the interface between economic development and external economic policies with a view to arriving at a systematic, coherent and rigorous understanding and appreciation of the major factors that will boost the country’s benefits in their economic relations with other states, especially with the People’s  Republic of China as the world’s

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